India bank liquidity surplus down sharply from record
India's banking system liquidity surplus has fallen to 4.92 trillion rupees ($51.36 billion) as of Monday, down from over 6 trillion rupees the previous day. The surplus had hit a record high of 11.16 trillion rupees on September 6, but has since declined by over 55%. The Reserve Bank of India has conducted debt sales totaling 750 billion rupees and intervened in the FX market, contributing to the rapid decrease in rupee liquidity. Outflows for advance tax payments and GST over the past week have also played a role, with a trader noting the dip is larger than anticipated.
India's banking system liquidity surplus has fallen sharply from the record high reached earlier this month, after outflows drained cash from the system. 36 billion) as of Monday, down from over 6 trillion rupees the previous day. 16 trillion rupees on September 6 and is now down more than 55%. The RBI has carried out debt sales worth 750 billion rupees and has also intervened aggressively in the FX market, which has led to a rapid drop in rupee liquidity, a trader with a private bank said.
The trader said the twin tax outflows had also played a role, but that the decline was far larger than markets had expected. 5 trillion to 4 trillion rupees have taken place over the past week toward advance tax payments and GST. 7925 Indian rupees)